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Kenya: Safaricom paves the way for its new CEO

By Morris Kiruga, in Nairobi
Posted on Friday, 25 October 2019 17:07

Peter Ndegwa, Safaricom's new boss, may be celebrating with a bottle of Senator, the affordable beer he introduced to the Kenyan market. Photo: Safaricom

Kenya’s leading telco, Safaricom, announced Peter Ndegwa as its new CEO a day after a customer-focused rebrand.

Safaricom announced Ndegwa’s appointment on 24 October. The managing director of Diageo Continental Europe, he will take over in April 2020 as Safaricom’s third chief executive, following the late Bob Collymore, who served from 2010 to July 2019.

The announcement marks the end of a two-year search for a new chief executive. At the heart of the succession debate within the Safaricom board was the issue of nationality, as Safaricom’s two CEOs since inception have been foreigners who eventually took up Kenyan citizenship.

Running Kenya’s most profitable company will be a new challenge for Ndegwa, a Kenyan citizen who has spent the past 15 years in the alcoholic beverages industry.

  • He joined Diageo group subsidiary East African Breweries in 2004 after an 11-year career in accounting firm PwC and has been managing director of Diageo Continental Europe since July 2018. He previously served as CEO for Guinness Nigeria and Guinness Ghana.
  • Perhaps to show Ndegwa’s suitability and understanding of the local market, Safaricom chairman Nicholas Nganga pointed out in a profile sent to newsrooms that the Kenyan “is credited with the development of an affordable-beer strategy for EABL resulting in the production of new brands such as Senator beer. Senator beer became one of the most successful innovations by Diageo that has been featured in the Harvard Business Review.”

In February, then Safaricom CEO Bob Collymore told The Africa Report that his successor should be “someone who understands the financial sector a lot more, if we are to occupy the fintech space, and someone who is not going to be scared of going into other markets”.

Birthday rebrand

The announcement came a day after Safaricom celebrated its 19th anniversary on 23 October, and its interim CEO Michael Joseph announced a rebrand and several consumer-facing changes.

  • Among the biggest changes was switching its brand promise from “Twaweza” (“We can”), which was launched just over a year ago, to “For You”.
  • Joseph also promised consumers better services and a better overall experience, announcing that the company would start giving new subscribers free SIM-cards from 1 November.

For the company’s 30-million-plus existing customers, the biggest change the telco made was to introduce new voice and data packages without expiry dates. The expiry of such products has been a constant source of consumer complaints in telco markets across Africa.

  • Safaricom’s announcement comes just weeks after a Nairobi lawyer filed a suit against the expiry of data and voice bundles by the telco and its competitors.
  • In mid-October, Ghana’s Ministry of Communications directed telcos to rollover unused data and voice bundles.
  • Late last year, South Africa’s telecoms regulator implemented similar rules, which took effect in March this year, to improve consumer choices and transparency.

The main issue for consumers is that it deprives them of services they have already paid for.

  • “Is technology stuck somewhere such that it’s impossible to let data last as long as it is not used? Or is this playing well to the vantage of service providers at the expense of the clientele?” a Malawian customer recently asked in a letter to the Lusaka Times.

Data, voice and messaging still account for the largest chunk of Safaricom’s revenue, although payment platform M-Pesa’s revenue share has been growing steadily. In its March 2019 results, for example, the three services accounted for a total of KSh152bn ($1.47bn) of the company’s KSh240bn revenue.

  • The immediate challenge is that the new bundles without built-in obsolescence will hurt revenue, but the company is banking on increased consumer confidence to bridge the gap. “I expect over time to see a corresponding increase in revenue also as we attract customers from other networks because this is unique to Safaricom,” Joseph said.

Why this matters:

While Ndegwa is still six months away from taking over as Safaricom CEO, his brief will include revitalising the Safaricom brand in its home market as well as leading its potential entry into Ethiopia.

  • In early October, interim CEO Michael Joseph told the Business Daily that the company was considering buying a stake in Ethio Telecom, the world’s biggest monopoly, or going for a greenfield investment as Ethiopia opens up its telecoms and financial services markets.
  • Ndegwa will also take over a company facing formidable competition, as Safaricom’s primary competitors, Airtel and Telkom Kenya, are working on a merger/joint venture which could be approved before the end of 2019.
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